January 2016 Newsletter

Happy New Year! It is truly an honor and privilege to Chair such a wonderful and informative association as The AARC. We are looking for to a prosperous housing and retiree market to service in 2016. The retiree market has become a tremendous economic boost for many communities as the boomer market retirement grows at a staggering rate.

Take a look at the AARC Seal of Approval communities as the south continues to be the top-tier of retirement destinations. As you explore your options for the destinations that fits your lifestyle, we hope you will take the time to view the many facets of the AARC, as we continue to be your resource for retiree-friendly cities and communities.

Sincerely,

Andre’ Nabors Chair, The AARC

5 Retirement Trends for 2016

By, Carol M. Kopp, Investopedia

The biggest retirement trend of 2016 may be that people age 65 and over really are, finally, retiring.

We’ve all heard that retirement at 65 is no longer a given because, after all, 65 is the new 55. If you’re wondering who is saying that, it is mostly baby boomers, those born between 1946 and 1964. The members of the biggest generation are now reaching age 65 in record numbers. And they have no intention of going gently into that good night.

Whether they are retired, semi-retired or starting second careers for the fun of it, their choices will dominate American culture for a long time to come. (See How Baby Boomers Will Change The Way Others Retire.) The number of baby boomers over age 55 hit 56.9 million in 2015, and by 2020 will hit a staggering 71.3 million. Following are a few of the choices boomers are making.

They’re Finally Retiring

Younger workers have been known to kvetch that baby boomers are hogging the upper rungs of the ladder in the workforce. By their sheer numbers, they dominated throughout their careers, but the Great Recession that began in 2008 put the kibosh on retirement plans for many. (See Are More Baby Boomers Returning to Work After Retirement?)

Well, the recession is behind us now and so, apparently, is the reluctance of baby boomers to retire. As of 2015, there were still some 45 million baby boomers in the workforce, but as an age group they are now a third-place minority, behind the so-called Generation X and the Millennial generation. That’s according to an analysis of the American workforce by Pew Research Center, based on the latest U.S. census data.

On the Road Again

If you want to know what those retirees will be up to, you’ll need satellite tracking. A new survey from AARPsays that fully 99% of baby boomers are planning to travel for the fun of it in 2016, and they have an average of four to five trips in mind. That’s a lot of moving around, since there are 76 million of them, or about 28% of the population.

They’re not scrimping, either. The survey results suggest that they’re less concerned about scoring a bargain overall than about the availability of free Wi-Fi. They’re planning to take short weekend hops to domestic destinations throughout the year, but most plan one or more ambitious “bucket list” vacations, often to an international destination.

The economic impact is significant. In recent years, the boomers have spent more than $120 billion a year in leisure travel, by AARP’s estimates.The latest numbers suggest that they are leaving younger generations in the dust: Barely more than half of Americans even take all of the vacation days their jobs allow them.

Downsizing, Downschmizing

Once again, baby boomers are defying expectations. As they approach or surpass retirement age, Americans are expected to “downsize,” trading their big family homes for smaller, more efficient houses, apartments or units in “senior communities.” But baby boomers seem to be staying put.

In fact, a report from Fannie Mae concludes that there is no statistical evidence to date that the current generation of older Americans is inclined to abandon their family homes.

In the words of The Washington Post, this is serving to “clog up the real estate pipeline.” It is causing a shortage of homes for sale, and a corresponding increase in prices. Real estate agents complain that the boomers are sitting on a vast inventory of desirable real estate. To which baby boomers, from a comfortable perch by the backyard swimming pool, probably reply with an unprintable phrase picked up at a Rolling Stones concert circa 1972.

The only explanation offered in the story is that baby boomers, like American homeowners of all ages, suffered a significant loss in home equity during the years of the housing bust. They are determined to stay put until their homes regain all, or most, of that lost value. But maybe it’s also because they don’t have to downsize, at least for financial reasons. And that’s because …

Boomers Rule

The boomer consumer will continue to control an outsize share of U.S. wealth. Collectively, this 28% of the population controls 70% of the total net worth of all American households. That’s a staggering seven trillion dollars. They also have a greater discretionary income than any other demographic. Overall, they account for 40% of consumer product demand.

Anyone considering marketing to the boomers had better keep one thing in mind, though: This generation hates, but hates, being called “senior.” They spend a lot of time, effort and money looking, acting and being youthful and vigorous. If you think “I’ve fallen and I can’t get up” is a funny tagline, you’re in the wrong business for America’s most lucrative target market.

Alone, but Not Forever

About 42% of Americans age 65 and over are currently single. But that doesn’t mean they’ve given up on looking for love. Increasingly, they are using online dating sites. (AARP has one devoted to singles.) However, the vast majority of single older adults seem to rely on old-fashioned networking to find new partners.Finding a new partner is a serendipitous effect of staying socially active.

This high percentage of single seniors is in part due to an increasing rate of divorce among older Americans. The divorce rate actually doubled among those ages 50 and over between 1990 and 2010, according to a study by sociologists at Bowling Green State University. And that is a peculiar fact, given that the divorce rate for Americans overall has been steadily declining since the 1970s.

The Bottom Line

The year 2016 may prove to be a transitional year for the baby boom generation. In terms of sheer numbers, they are beginning to retire at last. But you may be sure that
this is just the latest of the many trends that they will set.

For the third consecutive year, Oregon holds on to the No. 1 spot as “Top Moving Destination,” as Americans continue to pack up and head West and South. Those are the results of United Van Lines’ 39th Annual National Movers Study, which tracks customers’ state-to-state migration patterns over the past year.

Oregon is the most popular moving destination of 2015 with 69 percent of moves to and from the state being inbound. The state has continued to climb the ranks, increasing inbound migration by 10 percent over the past six years. New to the 2015 top inbound list is another Pacific West state, Washington, which came in at No. 10 with 56 percent inbound moves.The Southern states also saw a high number of people moving in with 53 percent of total moves being inbound. In a separate survey of its customers, United Van Lines found the top reasons for moving South included company transfer/new job, retirement and proximity to family.The Northeast continues to experience a moving deficit with New Jersey (67 percent outbound) and New York (65 percent) making the list of top outbound states for the fourth consecutive year. Two other states in the region — Connecticut (63 percent) and Massachusetts (57 percent) — also joined the top outbound list this year. The exception to this trend is Vermont (62 percent inbound), which moved up two spots on the list of top inbound states to No. 3.“For nearly 40 years, we’ve been tracking which states people are moving to and from, and we’ve also recently started surveying our customers to understand why they are making these moves across state lines,” said Melissa Sullivan, director of marketing communications at United Van Lines. “Because of United Van Lines’ position as the nation’s largest household goods mover, our data is reflective of national migration trends.”“This year’s data reflects longer-term trends of people moving to the Pacific West, where cities such as Portland and Seattle are seeing the combination of a boom in the technology and creative marketing industry, as well as a growing ‘want’ for outdoor activity and green space,” said Michael Stoll, economist, professor and chair of the Department of Public Policy at the University of California, Los Angeles. “The aging Boomer population is driving relocation from the Northeast and Midwest to the West and South, as more and more people retire to warmer regions.”

United has tracked migration patterns annually on a state-by-state basis since 1977. For 2015, the study is based on household moves handled by United within the 48 contiguous states and Washington, D.C. United classifies states as “high inbound” if 55 percent or more of the moves are going into a state, “high outbound” if 55 percent or more moves were coming out of a state or “balanced” if the difference between inbound and outbound is negligible.

Moving In

The top inbound states of 2015 were:

Oregon

South Carolina

Vermont

Idaho

North Carolina

Florida

Nevada

District of Columbia

Texas

Washington

The Western U.S. is represented on the high-inbound list by Oregon (69 percent), Nevada (57 percent) and Washington (56 percent). Of moves to Oregon, a new job or company transfer (53 percent) and wanting to be closer to family (20 percent) led the reasons for most inbound moves. Nevada remained on the high inbound list for the fifth consecutive year.

Moving Out

The top outbound states for 2015 were:

New Jersey

New York

Illinois

Connecticut

Ohio

Kansas

Massachusetts

West Virginia

Mississippi

Maryland

In addition to theNortheast, Illinois (63 percent) held steady at the No. 3 spot, ranking in the top five for the last seven years.

New additions to the 2014 top outbound list include Connecticut (63 percent), Massachusetts (57 percent) and Mississippi (56 percent).

Balanced

Several states gained approximately the same number of residents as those that left. This list of “balanced” states includes Alabama, North Dakota, Delaware and Louisiana.

Single-family homes “headed for higher ground”

LAS VEGAS – Jan. 20, 2016 – A firming economy, solid job growth, rising consumer confidence, higher household formations and pent-up demand will help bring buyers back into the marketplace in 2016, according to economists speaking at the National Association of Home Builders (NAHB) International Builders’ Show in Las Vegas today.

“There are a number of positive indicators that provide solid evidence this will be a good year for housing and the economy,” said NAHB Chief Economist David Crowe.

Private sector job growth has been averaging 240,000 per month over the past two years. GDP growth is expected to climb slightly above last year’s level and consumer confidence is nearly back to its pre-recession peak, Crowe noted.

Builders top concerns heading into 2016 include the cost and availability of developed lots and labor, federal environmental regulations and policies that make it more expensive and difficult to build homes, and the price of building materials.

Solid gains for single-family production

NAHB forecasts 1.26 million total housing starts in 2016, up 13.4 percent from a projected 1.11 million starts in 2015. Single-family production is expected to reach 840,000 units this year, an 18 percent increase from a projected tally of 711,000 units in 2015.

Using the 2000-2003 period as a healthy benchmark when single-family starts averaged 1.34 million units on an annual basis, Crowe said the ongoing housing recovery will see single-family starts steadily climb from 55 percent of normal production at the end of the third quarter of 2015 all the way up to 87 percent of normal by the end of 2017.

On the multifamily side, NAHB anticipates 417,000 starts in 2016, up 5 percent from an expected total of 397,000 units last year.

Meanwhile, residential remodeling activity is expected to register a 1.1 percent gain this year over 2015.

A bright regional outlook – with one exception

David Berson, chief economist at Nationwide Insurance, said that most regional housing markets look healthy.

Labor market conditions, a key driver of housing demand, are strong in many metropolitan statistical areas (MSAs). That supports faster household formations and boosts local housing activity through rising incomes. These factors indicate that most of the 400 local U.S. housing markets “should see sustained growth in the coming year,” Berson said.

With the unemployment rate declining in 90 percent of the MSAs over the past year, Berson said that the housing fundamentals are the strongest in over a decade, a trend supported by the labor market, demographics and consumer preference to own.

However, Berson noted that many MSAs with strong ties to energy exploration and production – states that include Louisiana, Texas, Wyoming and South Dakota – are expected to see limited housing expansion in the near term as low oil prices are reducing employment.

Mortgage rates: from “cheap” to low

Frank Nothaft, chief economist of CoreLogic, foresees solid fundamentals for housing in 2016. With 30-year fixed-rate mortgages running at or below 4 percent during the past year, Nothaft called them “cheap.” He said mortgage rates are expected to gradually rise one-quarter to one-half a percentage point this year up to 4.5 percent, going from “cheap to low.”

Nothaft predicted that overall home sales will rise 4-5 percent in 2016, led by a 13 percent gain for new home sales, with sales volume and growth strongest in the South and West. “There is stronger growth in households, population and demand for new housing” in these regions, he said.

Nationwide home prices this year will increase about 4-5 percent above last year’s level and are projected to reach their 2006 peak by mid-2017, Nothaft said.

Tight mortgage credit for consumers is expected to ease slowly this year but remain relatively tight compared to 15-20 years ago.